Exam 10: Substantive Testing and Balance Sheet Accounts

Based on her review, Joyce Yu found both inherent risk and control risk at a major research facility to be high. One would expect that her amount of substantive testing required would be:

Theresa Bamboukian started her sales process audit and was accounting for the numerical sequence of sales invoices, sales orders and shipping documents. In addition she performed a Reconciliation of billings with shipping documents. Which assertions was she fulfilling?

Natalya Rovinescu, the external auditor at Nautilus Minerals, was trying to determine whether she could rely on the relevant work of the internal audit department. She would place Most confidence if the internal auditor reported to the

Which type of leases are not recorded on the balance sheet?

Which of the following are substantive tests of payables balances that are always performed?

A fixed assets register is used to capture additions and disposals of fixed assets, as well as calculating depreciation charges.

Which of the following account balances are typically audited fully or substantially with limited or no controls testing?

Completeness of property, plant and equipment is usually not a major issue for most entities because:

Which of the following is a substantive test of the trade receivables balance that is always performed?

What are the principal objectives in auditing trade receivables?

Discuss the specific issues that auditors should consider when designing substantive procedures.

When the assessment of inherent and control risk is low:

Provisions can be easily audited by controls testing alone.

Auditors usually test for the existence of property, plant and equipment by:

A pledge is something delivered as security for the payment of a debt or the fulfilment of a promise.

Celestino Minotti tested the posting of individual credit memos to the sales returns and allowances ledger and to the trade receivables sub-ledger. Which assertion was he fulfilling?

The typical procedures performed to verify that the client has not omitted any amounts from the payables balance include:

Martin Bellefeuille was asked by his audit manager to perform an evaluation of the operating effectiveness of controls in preventing material misstatements at the assertion level. In Complying with the request, what did he do?

The typical procedures performed to search for unrecorded payables are referred to as subsequent payments testing and cut-off testing.

When performing substantive procedures, the key objective is to determine whether: